Netflix will resume international expansion after almost a year’s holiday to recoup its finances by launching in the Netherlands later in 2012. This will be the OTT operator’s seventh European market entered after a spate of launches during 2012 that started with the UK and Ireland before culmanting with Norway, Sweden, Denmark and Finland in October. Overseas expansion was then halted because launch costs including infrastructure and content deals were outstripping revenues.
But, finances have recovered and revenues topped $1 billion for the first time in its corporate history in Q1 of 2013, compared with $889 million for Q1 2012. Admittedly, profits are still negligible, and the revenue growth was largely attributable to the success of the House of Cards series in the U.S., while international streaming is still projected to lose $81 million even in the second quarter just finishing.
On the other hand, Netflix has been buoyed by international subscriber growth of 1 million in the first quarter, coupled with positive feedback from its early Nordic customers. A survey of 1103 Danish adults, compiled by consumer research firm TNS Gallup, found that Netflix is well ahead of other OTT providers in the country, with 8 percent of respondents reporting they use the service at least weekly. HBO Nordic had just 1 percent of survey takers claiming to use the service at least weekly, and YouBio 4 percent.
Netflix also received a boost. around the time of its Netherlands announcement. from credit ratings agency Moody’s, whose verdicts seem capable of moving economic mountains, and which has come up with an assessment that the operator is successfully managing the risk of increased programming costs with a more selective approach to acquiring content. This coincided with Netflix’ biggest content deal yet with DreamWorks, embracing 300 hours of new children’s and family programming.
This content will strengthen Netflix’ hand in the Netherlands, which is a logical target given that 90 percent of the population is capable of conversing in English, with many frequently watching programming in the language without subtitles. The country also scores highly for suitable OTT infrastructure, with 80 percent of the 7.5 million households having high broadband access, according to the Organization for Economic Cooperation and Development.